Virtual reality has been embraced in China and Chinese consumers have shown a willingness to go out and purchase VR devices or experiences, whereas consumer interest in the West has been considerably more muted.

As the world’s most important market for VR, China is actively investing in the promising mobile and high-end segments of VR for gaming and many of the leading Chinese tech companies are embracing VR in earnest. The report explains our analysis on the factors that are driving growth as well as which technologies, companies, and games are important.

Key Takeaways From The Analysis:

Virtual reality hardware and software revenue will rise from $249 million in 2016 to $1.7 billion in 2021.

There are more than 200 active virtual reality (VR) and augmented reality (AR) startups in China.

There are more than 5,000 VR experience zones across the China. This expected to rise in 2017, driving higher use of PC-based VR hardware and software.

Total spending on VR hardware in 2016 totaled $235 million, driven by a high volume of mobile VR headsets at low average selling prices alongside a low volume of PC and console VR headsets at high prices.

Mobile VR overall is currently the main driver of virtual reality in China, driven by low cost, ease of use and compatibility.

PC-based VR has many barriers to entry at this point, but will become just as important as Mobile VR in the long term.

2017 marks a year of consolidation with many small VR and AR companies leaving the market, even after they have received investment, while those at the top expand their positions.